Zeta Global Raises $140 Million For Its Marketing Cloud

Zeta Global today said it raised $140 million in a large late-stage equity and debt funding round that appears to set up the marketing cloud company for an eventual initial public offering or acquisition.

The funding, according to sources close to the company, hikes the company’s valuation, already in unicorn territory from a previous round, to $1.3 billion. The Series F financing, the company’s largest yet, includes $115 million in equity and $25 million in debt financing from asset capital firm GPI Capital as well as funds sponsored by Franklin Square Capital Partners and sub-advised by GSO Capital Partners LP, the credit division of Blackstone.

Chief Executive David A. Steinberg said in an interview that the nine-year-old company, cofounded by Steinberg and former Pepsico and Apple CEO John Sculley, had intended to raise only $50 million to $75 million, but “all these guys wanted to deploy more money.”

The higher fundraising gives the company more capital to make further acquisitions. Zeta originally focused mainly on email marketing, but in recent years it has expanded partly through acquisitions into broader offerings in the market known as customer lifecycle management, helping the likes of Ikea, Toys R Us and UPS acquire and keep customers. It bought the customer relationship management division of eBay's Enterprise operation in late 2015 and Acxiom Ltd.’s email services unit last August.

“Going public would be the next logical step,” Steinberg said, but he and Sculley insisted they’re in no hurry and will wait to see how the market does this year.

They said the company, which recently hired a chief financial officer last year and a chief revenue officer in March, is cash-flow positive, has operating margins in the high teens and would be fully profitable if not for acquisition costs. Zeta doesn’t provide revenue but said it rose 50% last year from its existing business and acquisitions.

“If the IPO path makes sense, that’s something that could be considered over the next year,” Sculley said in an interview. On the other hand, he said, another company could acquire Zeta, continue adding acquisitions to it and build a “multibillion-dollar company.”

Zeta faces increasingly acquisitive rivals. Oracle, Adobe, IBM and Salesforce.com all have been steadily adding advertising and marketing tech firms in recent years to build their own marketing clouds.

Steinberg said Zeta sets itself apart with a database of more than 350 million permission-based profiles, nine patents in machine learning and process automation and a team of 700 engineers in India that can provide managed services, not just self-service.

For Steinberg’s part, the financing provides flexibility. “If the markets continue to go up, the markets will be open to us,” he said. “If they go down, we’re in a good position to pick up acquisitions.”

I write about the Internet technologies and upstarts that are disrupting advertising and media faster than ever. I'm living this disruption, so I might as well write about it, too. I spent nine years as chief of BusinessWeek's Silicon Valley bureau writing about the leading ...